The Comprehensive Financial Planning Guide for Beginners

You know you need to prepare for your future. You understand that the only way you are going to be able to retire at a reasonable age is to have money set aside that you can live on without having a job. However, what you don’t know is how to get started. The best place to start is to understand that the only good financial plan is a comprehensive one. Comprehensive financial planning is a tool for giving you the exact steps you need to take to meet your financial goals.

No one else has the same exact goals as you do, so it is important to ensure your plan meets your needs and not anybody else’s needs, meaning you should not seek financial advice from someone whose entire purpose for meeting with you is to sell you financial products. Instead, you need to set your own goals, outline your own plan, and gather your own data before you consider getting advice. Having your plan laid out will help you avoid making mistakes or falling for sales pitches that don’t help you progress toward your goals.

Comprehensive Financial Planning Components:

Most financial advisors only pretend to offer comprehensive financial planning. Instead, they are trying to sell you their financial products so they can get a commission. Sure there are some advisors who have your best interests at heart, but when it comes right down to it, only you are going to make the best decisions for your financial future. Before you go in search of any financial products you might think could help you meet your goals, take a look at the components of a comprehensive financial plan and come up with a basic outline of your needs.

You need to have the big-picture in mind when you start to plan for your future. Your financial decisions are entirely interconnected. For instance, if you purchase a house with a huge mortgage, which is probably going to affect how much you can save each month for retirement. Gather data on every aspect of your financial circumstances. How much debt do you have? What are your monthly bills? How much money do you need to live on right now? How is that amount going to change in the future? Use a retirement calculator like this one to help you determine your income needs.

Set measureable goals. Unless you have goals in mind, you won’t be able to determine how much progress you are making toward your future. Think about what you want your retirement years to look like. Do you want to travel? Do you want to own a boat or motorhome? Do you want to work part time? Do you want to have money to pursue your hobbies? All of these aspects of life should be considered when you are setting your goals.

Establish an emergency fund. You should not start investing in retirement funds until you have between three and six months’ worth of expenses saved in a place where you can access them immediately. Keep in mind that you will not be able to withdraw your funds in retirement accounts quickly or without penalty in the event of an emergency. Having an emergency fund will help keep you afloat until you can reassess your financial situation.

Monitor your Progress:

When engaging in comprehensive financial planning, you must have a way to monitor your progress. Every year or so, revisit your plan and determine how much progress you are making toward your goals. If you find that you are not making as much progress as you would like, then you need to re-evaluate your plan and try to find ways to make bigger contributions toward your future. If you are making more money than you were when you first established your plan, think about making higher contributions to your accounts. If you can do this, and you meet some of your goals earlier than anticipated, set new goals that will make your retirement years even better.

Of course, once you have your general plan in place, then you can start to seek out financial products that will help you complete your comprehensive financial planning strategy. Do not allow financial advisors to sway you from your goals just to sell you a product. There are tools out there that can give you exactly what you need to meet your goals, so don’t settle for something that is going to get you off course.

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